It does make sense. If money is indeed tight for people, where else are they going to shop?
On a day that Target (TGT), JC Penny (JCP) and Nordstrom (JWN) reduced guidance, Wal-Mart (WMT) released sales results today:
5 Weeks Ending 10.6.2007
Wal-Mart = +6.4%
Sam's Club = +6.8%
35 Weeks Ending 10/5
Sam's Club= +7.0%
For the September five-week period, comparable store sales at the Wal-Mart Stores segment were driven by grocery and pharmacy. The Company marked the anniversary of its $4 generic prescription program with a national expansion of additional medications available for treating even more conditions.
Overall, apparel and home remain soft. Company research reinforces that customers remain concerned about their finances, especially the cost of living. Within this environment, Wal-Mart Stores continues to reinforce its price leadership message, and during September launched its national brand advertising campaign with the new tagline “Save money. Live better.”
Sales for the five-week period were driven by increases in average ticket for both business and Advantage members, with small business member sales growth continuing to lead. Sales strengths for the month included fresh food, grocery, electronics and video games. As October progresses, the clubs are transitioning into holiday entertaining in food and general merchandise.
During the September period, the United Kingdom, Brazil and China continued their recent positive performance. Sales throughout Brazil continue to be driven by a stronger price position, assortment that is customized to the local community and a recovery of disposable income. Macroeconomic factors continued to contribute to a slowdown in sales in Mexico.
Wal-Mart then raised earnings guidance for Q3 6% from the previously stated guidance of $0.62 to $0.65 to a range of $0.66 to $0.69. Nothing wrong with that. What pleases me most is the continued surge in growth in the international division. International operations now make up 25.8% of sales vs 23.5% in 2006. I have stressed my feelings on the potential here both in China and in India and this growth underscores my point. This is where money needs to be spent.